Exhibit 99.1
Exhibit 99.1
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Russell Corporation Analyst Day
May 12, 2005
Forward Looking Statement
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The information presented involving the use of forward-looking statements are estimates. These forward-looking statements are subject to various risks and uncertainties, including market conditions, customer demand and the economy, which could cause actual results to differ materially from those, stated or implied by such statements. In addition, risk factors change from quarter to quarter. The information contained in this presentation is subject to change, completion, or amendment without notice.
The financial information contained in this presentation is qualified in its entirety by the audited financial statements (including the financial notes), which were filed with the SEC in our Annual Report on Form 10-K, for the year ended January 1, 2005 and the financial information included in our Quarterly Reports on Form 10-Q filed with the SEC since that date.
Agenda
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Introductory Comments Roger Holliday
Russell Corporation Strategic Overview Jack Ward
Russell Corporation Initiatives Jon Letzler
Spalding Group Overview Scott Creelman
Russell Athletic Group Overview Calvin Johnston
Brooks Overview Jim Weber
Agenda
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Mossy Oak Overview Mark Tate
Activewear Group Overview Julio Barea
Capital Structure Review Martie Zakas
Financial Objectives Bob Koney
Panel Q&A All
Conclusions Jack Ward
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Russell Corporation OVERVIEW & STRATEGY
Jack Ward Chairman and CEO
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Russell is an international $1.5 Billion leading authentic athletic and sporting goods company with over a century of success.
A Brief History of Russell
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1902 – 1997
Primarily domestically focused Excellent products, great reputation Vertically integrated Sourced 5% of goods sold Limited marketing
An authentic heritage based on quality and performance.
A Brief History of Russell (continued)
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Corporate Repositioning (1998 – 2001)
Moved 99% of sewing offshore
100% of yarn requirements sourced from Joint Venture or outside Exited $150 million of unprofitable businesses Reduced costs by over $150 million Substantially increased investment in consumer research and marketing
Russell is more Global & Cost Competitive.
A Brief History of Russell (continued)
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2002 – Present
Implemented strategic direction to become a broader sports company Established new capital structure Acquired six strategic businesses Increased focus on marketing and product innovation
Diversifying Russell for more predictable long-term growth.
New Segment Reporting
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Sporting Goods
Activewear
Other
Estimated Segment Revenues
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2004 2005
46%
4%
50%
50%
4%
46%
Sporting Goods
Activewear
Other
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Supply Chain Strategy
Source or produce ourselves, choosing the lowest cost model to deliver product to the local market.
Supply Chain Today RUSSELL CORPORATION EQUIPPED TO WIN EQUIPPED TO WIN EQUIPPED TO WIN EQUIPPED TO WIN EQUIPPED TO WIN EQUIPPED TO WIN EQUIPPED TO WIN EQUIPPED TO WIN
Sporting Goods Sourced Internal
Equipment 60% 40%
Footwear 100% -
Apparel 40% 60%
Activewear
Apparel 30% 70%
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MARKET OVERVIEW
The Sporting Goods Market
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2004 Wholesale Sales
46%
Apparel
Equipment
35%
Footwear
19%
Sporting goods industry is a $52.1 billion market in the United States
Two-thirds of
Americans participate in sports, fitness and outdoor activities
* SGMA—January 2005—State of the Industry
The Sporting Goods Market
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Overall market grew 4% to $52.1 Billion Sports Apparel increased 5.5% to $24.1 Billion Sports Equipment increased 2.8% to $18.0 Billion Athletic Footwear increased 2.6% to $10.0 Billion
* SGMA - January 2005 - State of the Industry
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DIRECTION BEYOND 2005
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RUSSELL CORPORATION VISION
“To be the world’s most respected athletic company.”
Strategic Direction
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Continue to build Russell into a world-class athletic and sporting goods company
Leverage our brands, category expertise, organization and strong customer relationships Continue to leverage synergies and aggressively reduce supply chain costs Broaden internationally by growing self-owned operations, licensees and distributors Manage in a highly ethical, credible and conservative manner
Key Strategies
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Build Spalding into a one-billion dollar global sporting goods mega-brand (equipment, apparel, shoes)
Aggressively develop Spalding internationally, including acquisitions and joint ventures, as appropriate Market Spalding apparel ourselves in the U.S. Develop a premium basketball footwear line, using Brooks’ expertise Spalding will be our largest international brand
Key Strategies
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Continue to build Jerzees as a low-cost provider of basic activewear
Introduce performance athleticwear products Invest in off-shore facilities and equipment to remain competitive Aggressively lower costs in all areas of the business
Key Strategies
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Expand performance athletic positioning for Russell Athletic
Grow sales of performance athletic products at retail Continue to build the college bookstore and team businesses, concentrating on outstanding customer service
Key Strategies
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Double sales and profits of Brooks over the next 4-5 years
Expand further into sporting good chains that sell technical running shoes Use Brooks’ expertise to develop products for other brands
Key Strategies
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Expand Moving Comfort as a high-end Women’s performance athletic brand
Build Bike as Authentic Athletic Protection
Expand Mossy Oak from a premier hunting brand to a premier outdoor brand
Key Strategies
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Pursue acquisitions where they can accelerate the growth of these key strategies
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Russell Corporation INITIATIVES
Jon Letzler President & COO
Brands
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Strong Customer Relationships
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Key Initiatives
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Focus on our brands Focus on our customers Focus on our operations
Focus on Brands
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Three major brands
Focus on Brands
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Multiple targeted brands
Highly relevant
More narrowly focused brands
Brand Framework
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Investment strategy based on long term potential
Channel/category conflicts being resolved
Remaining brands used for trade/channel differentiation
Focus on Brands
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Team, Sporting Goods
Focus on Brands
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Sports Specialty
Focus on Brands
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Mass Retail
Focus on Brands
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Wholesale
Focus on Customers
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Simplify customer contact/ consolidate sales
Consolidate selected marketing and merchandising programs Provide improved customer service, simplification, lower costs
Focus on Operations
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Accelerate synergistic opportunities
Transportation Procurement Sourcing offices Innovation Distribution Customer Service
Focus on Operations
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In 2003, began $30 million project to improve all systems By completion, expect significant improvement
Customer service Inventory turns Reduced cost Improved responsiveness
Expected Results
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Improved customer service Greater innovation Improved efficiencies Increased asset utilization Improved profitability Accelerated growth
The Spalding Group
Scott Creelman CEO
Spalding Group Today $400MM in worldwide direct and licensed sales #4 highest sports brand awareness in U.S.
50% brand sales in US; 50% brand sales in international 80 country specific distributors worldwide 70 licensees with specific category expertise
Spalding Group Today
World’s largest basketball equipment supplier Extensive “consumer equity”
Innovative product history -Infusion Important endorsements -NBA, WNBA, AFL, Leagues Worldwide acceptance
Spalding Key Strategies
Building brand strength establishing a predominant position in basketball in all relevant product categories
Balls Backboards Accessories
Spalding Key Strategies
Fully integrate AAI and Huffy Sports
Spalding Key Strategies
Building a consumer oriented global brand
Megabrand platform for future products $1 billion potential
Spalding Key Strategies
Introducing consistent and well defined expansion programs
Focusing on integrated product innovation Global distribution strategy New apparel to be marketed directly in-house Brooks technology for future Spalding shoes
Spalding Key Strategies
Execute new initiatives for international growth
Capitalize on Spalding’s high global awareness Leveraging positive consumer acceptance
Spalding Key Tactics
A solid basketball foundation worldwide Product innovation and leadership Backboard /accessory acquisition in 2004—AAI, Huffy New NBA long-term exclusive contract—8 years
Spalding Key Tactics
New Spalding basketball branding -balls, backboards 28 high school state adoptions 53 country international pro leagues—new long-term China League Agreements Significant new sporting goods store distribution Worldwide consumer advertising
Spalding Key Tactics
A Comprehensive Global Brand
Rolling out currently
Extensive consumer research Applications
? Worldwide equipment
? Apparel
? Footwear
Executed through products, advertising, web
Video
Spalding Key Tactics
Building Profitability
Huffy is forecast to have at least 10% operating income (as a percent of sales) by 2007 Additional growth opportunities:
Key products - football, volleyball, baseball Spalding apparel (Russell in-house) Spalding footwear (Brooks in-house)
Spalding Key Tactics
Further Product Category Expansion
Utilizing “Path to Excellence” strategy
Spalding Path to Excellence
Performance Footwear
Performance Retail Apparel
Institutional Apparel
Equipment / Accessories Retail
Equipment / Accessories Institutional
Balls – Retail
Balls – Institutional
INDIVIDUAL CATEGORY
Spalding Key Tactics
First Step in Football
New J5V Advance -Auburn use AFL ball Pop Warner endorsement
Spalding Key Tactics
First Step in Volleyball
New King of Beach product 20 State adoptions Grass roots marketing
Spalding Key Tactics
First Step in Apparel
Acquired majority of apparel rights back from current licensees Will utilize Russell apparel skill sets—design, production, distribution
Spalding Key Tactics
International Growth
Totally integrated all backboard sales with Spalding Restructured distribution key markets -Mexico, Canada, Australia, China, Scandinavia Totally restructured/upgraded $100MM Japan master licensing with Itochu Fashion System
Spalding Key Tactics
International Growth (continued)
China
Launching new footwear, apparel licensee in China Includes 600 Spalding stores and shops by end 2006 Launching new backboard distribution in China
Strategic Growth Overview
Calvin Johnston CEO
To be the preferred performance brand of athletes Everyday!
Russell Athletic Brand History
Russell Athletic owns a unique and solid history as an Authentic Athletic Brand:
Started in the early 1930’s
Today, Russell is the #1 supplier in team uniforms & practice wear:
- Outfit over 500+ Division I Men’s and Women’s Teams
31% of high school athletes wear Russell Athletic
32% market share of baseball uniforms
47% market share of football uniforms
Russell Athletic Team Sports
Offer Key Service Programs:
Supplier of team uniforms and practice wear
Stock Product
Decorated Stock Product
Customized Team Uniforms
Work through dealer network to service high schools, universities and intramural teams
Russell Athletic Team Sports
Key drivers are brand credibility and service Will drive future growth by “Owning the Campus” in apparel and equipment Official sponsor of Little League World Series
Russell Athletic Retail Products
Historically strong in sweats and tees
Durable
Comfort
Value
Russell Athletic Group Retail Products
Increasing focus on building brand position and sales within $1.0 billion performance category
Trade consumers up to higher price points
Activewear
Sweats T-shirts
Everyday Performance Wear
Dri-power
Shirts: T, Tank, L/S Shorts
Technical/Elite Performance Wear
Sport Specific Items Breakthrough Technology Premium Prices
Key Action Points
Offer products with improved quality and performance features:
Moisture Management Soft Feel Breathable Non-chafing Style
Dri-Power rated by SGB as the best
performing moisture management product
Drive message home to consumers
Sponsorships
Drive message home to consumers
In-Store
Drive message home to consumers
Media
Early results validate our ability to win with this strategy: Performance range up 100% vs. ‘04 Store tests in Dick’s are performing well above national averages.
Spring sell-thru is up in top national accounts:
Men’s Women’s
Account A +10% +11%
Account B +80% +85%
Account C +44% +38%
Account D +17% +14%
Russell Athletic College Bookstore
College Bookstore business continues to perform well
» Strong double digit growth
» Innovative Service Programs
- Sports Track
- Sidelines
“A Fit Woman is a Powerful Woman”
Moving Comfort History
Founded in 1977 by Elizabeth Goeke and Ellen Wessel to meet the particular running apparel needs for women Goal is to free women to pursue their workouts, free of distraction from clothes that don’t enjoy the ride Acquired by Russell in 2002 Strong, loyal following
Product Portfolio
Complete line of premium sports bras and activewear. Focus on:
Fit Support
Comfort
Moisture Management
Expanding distribution in national sporting
chains
Account A: Jan ‘05 41 Doors
May ‘05 80 Doors
Dec ‘05 115-120 Doors(Goal)
Account B: One Fixture in 220 Doors
Two Fixtures in 50 Doors
#1 sports bra in REI (53 Doors) & Title 9
Advanced Athletic Protection
Bike History
Founded over 130 years ago
Historically strong in cups, supporters and football protective equipment Acquired by Russell in 2003 Currently developing a more innovative and leadership brand proposition Official protective gear of Pop Warner Football
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Focus on Athletic Protection and Sports Medicine Incorporate moisture management and compression Enhanced packaging
Strategy Overview
Jim Weber CEO
Brooks Sports was founded in 1914 $170 MM Brand
Licensed 35%
Direct 65%
Int’l. 52%
Domestic 48%
And we are focused on Running…
Uniquely Positioned to Benefit from Surge in Running and Fitness Lifestyle…
Consumer Trends
Obesity/Diabetes Women in sports Baby boomers playing and spending
Running Trends
Women and youth are driving growth Continued proliferation and rising popularity of races Walking/Active lifestyle a driver
* Source: National Health & Nutrition Examination Study 2003.
Running Category is Large and Growing
Running footwear represents approximately 6.0% of sporting goods and 29.0% of athletic footwear
Manufacturers’ Sales of Athletic Footwear ($ in Billions) $10.5 $10.0 $9.5 $9.0 $8.5 $8.0 $7.5
1999 2000 2001 2002 2003 2004(E) 2005(E) $8.7 $9.0 $9.1 $9.3 $9.8 $10.0 $10.2
Source: SGMA, Recreational Market Report – 2003.
Running Participation Continues to have a Broad Base
U.S. Running Participation (Millions of participants)
38.0 37.0 36.0 35.0 34.0 33.0 32.0
1993 1998 2001 2002 2003 2004
8.8
34.1
35.0
34.9
35.9
36.2
37.3
12.0 11.0 10.0 9.0 8.0
10.7
(E)
Running Participation
Frequent Running Participation
Note: Running at least once per year – Six years of age or older. Source: SGMA, Sports Participation in America – 2004.
U.S. Marathon Finishers Set Another Record
Participation set another all-time record in 2004
Broader participation base as median finishing times have consistently risen.
U.S. Participation (thousands of participants)
425 375 325 275
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
312
340
340
360
374
389
366
388
400
423
U.S. Marathon Participants
Source: USATF RRIC.
Brooks Strategy Evolution
Different is essential
Customer/consumer relevance
Business model discipline
Brand creation requires vision and passion
Purpose, values, culture, relevance
Team Win
Deliver results, shoot straight, stay connected with reality, be accountable
Building a Brand
People want to be part of something big, important and meaningful.
Inspire people to run and be active.
Building A Brand
Success In Performance Running Requires a Distinctive
Competitive Strategy . . .
Product leadership
Performance function, innovation, style, quality
Best in class customer service
People, on time delivery, cycle management, systems, supply chain
Marketing energy
Momentum, cool factor, grass roots, close to runners
Competing with Product
Every great brand in sporting goods began with innovative, performance product that enthusiasts found (usually in a specialty store), embraced, and told their friends about.
Competing with Product
Most important criteria in evaluating running shoes are function based:
Runners are repeat customers.
Fit/Comfort 99.0%
Cushioning 90.0%
Injury Prevention 79.0%
Stability 74.0%
Motion Control 63.0%
Price 53.0%
Weight 49.0%
Brand 44.0%
Weather Protection 24.0%
Appearance 24.0%
Brooks excels here.
Average number of pairs purchased in last 12 months is 2.6 pairs.
Source: According to Runner’s World 2004 Survey.
Competing with Product
Adrenaline GTS IV & V, Best Update by Runner’s World, Gold Medal for “Best Renovation” by RN, Best All Around Shoe by Shape, “Most Stable and Comfortable” by Consumer Reports Magazine
Adrenaline ASR, Editor’s Choice by Runner’s World
Epiphany, Best new shoe by Running Network
Trance NXS, “Breakthrough Award” by Men’s Journal, Best Update by Runner’s World U.K.
Dyad, Best Cushion Shoe by Men’s Journal, Best New Shoe by Running Network
Vantage, Best Buy by Runner’s World
Beast/Ariel, Gold Medal for “Best Motion Control” by
Running Network
Product Positioning Separates Brooks from Competition
Channel / Performance product focus has given Brooks brand the highest average price points in running category.
Retail Price Points 2005 $90.00 $75.00 $60.00 $45.00 $30.00 $15.00 $0.00
Brooks ASICS Nike Adidas New Balance Saucony $76.36 $65.64 $61.23 $54.24 $48.87 $46.46
Source: Sportscan.
Brand Directed Channel Strategy
Specialty Running Shops Internet Specialty Athletic Specialty Store Department Stores Full Service General Sporting Goods Athletic Specialty Promotional Department Stores General Mass Merchandise And Other
Fleet Feet Sports Marathon Sports Run Tex Road Runner Zappos Finish Line Nordstrom Dick’s Sports Authority Sport Chalet Foot Locker Robinson May Macy’s Big 5 Kohl’s Famous Footwear Shoe Pavilion DSW
Brooks
Asics
Puma
New Balance
Nike
Gained 2 Share Points in 2004 We are #2 in Specialty Channel
23% 19% 14% 10% 5%
ASICS
Brooks
Nike
New Balance adidas
Saucony
22% 20% 20% 22% 14% 15% 16% 17%
15% 15% 14% 12% 12% 10% 10% 11% 11% 10% 13% 12% 12% 13% 12% 12%
Source: Sports Marketing Surveys USA
Spring ‘03
Fall ‘03
Spring ‘04
Fall ‘04
Connect with Key Influencers
Brooks-Hansons Olympic Distance Project
Connect with Key Influencers
Renowned UltraRunner Scott Jurek
Connect with Key Influencers
Professional Purchase Program
Connect with Key Influencers
Field Marketing/Events
Not Just A Strategy, A Brand Positioning…
PREMIUM / HIGH QUALITY
PUMA
CASUAL
FILA
AVIA
RYKA
VALUE
TECHNICAL / AUTHENTIC
2000 Brooks adidas
Reebok
NEW BALANCE
SAUCONY
NIKE
2009 Brooks
Mizuno
ASICS
2004 Brooks
adidas
Inspire… Run world, run.
New global brand campaign designed to turn some heads and position Brooks uniquely in the running community TV, Print, In-store, Web, Guerilla, PR
12-month campaign; August ‘04 kickoff
Planned Growth is Driven by Existing Initiatives
Brooks plans to double its business in the next 4-5 years, primarily from the execution of existing business initiatives
Further Specialty shelf penetration in both footwear and apparel Additional market share gains from franchise products Strategic expansion into service-oriented retailers including general sporting goods, athletic specialty, and department stores, and Internet Continued international growth
Brooks Utopia
EPICENTER OF THE RUNNING EXPERIENCE
A COMPANY WITH GOOD PRODUCT & SERVICE
Mark Tate President
A leading brand of hunting apparel
A “passion sports” brand User-experts focused on the outdoor market Products for the specific performance needs of consumers Complete brand/channel portfolio
Vision: We will build and leverage one of the strongest brands in hunting to become the premier marketer of innovative gear for outdoor recreational lifestyles
Mission: Outfitting the Outdoor Obsession
Leverage hunting heritage and expertise to aggressively expand into casual apparel
Target core consumers initially
Expand to bring in a broader mix of outdoors-minded people
Strategically, casual apparel is an opportunity to:
Create more wearing occasions Expand selling seasons Reduce seasonality
Expand distribution of hunting and casual apparel into non-traditional channels of distribution
Reach broad consumer base that identifies with lifestyle Align with key apparel purchase outlets for other outdoor lifestyle apparel
Expand brand awareness
Market highest performance hunting products
Market APX—Advanced Performance for Extremes Use key design functions from Outdoor industry Create “Halo” effect on brand
NRA Golden Bullseye Award Recipient
Additional key strategies
Expand core product offering Develop leadership in Customer Satisfaction Leverage corporate sourcing and product development capabilities
Strategy Overview
Julio Barea CEO
Russell Activewear
Leverage Jerzees’ #1 position in fleece into leadership positions in other activewear categories in both artwear and mass retail channels, through product innovation, cost reduction and competitive pricing.
Customer Flow
Activewear
Artwear
Mass Retail
Wholesale Distributors
Large Screenprinters/ Embroiderers
Screenprinters
Embroiderers
Groups
Retail
Corporate
JERZEES - Mass Retail
Awarded Target’s Partner Award of Excellence - recognizing innovative leadership, superior business practice
JERZEES—Mass Retail
Jerzees consumers are trading up Increased new product introduction in ‘04-’05 ?Moisture Control / Antimicrobial socks ?Printed T-shirts ?Brushed lightweight garments #1 in Men’s and Boys’ sweats at mass retail #1 in Athletic socks at WalMart
JERZEES - Artwear
In every major wholesaler in the U.S.
#1 in fleece (2004)
#1 in 50/50 T-shirts (2004) - the fastest growing T-shirt category
JERZEES—Artwear
#2 in Sportshirts (2004)
Improving trends in overall market
Accelerated direct sales
Selectively introduce “other” Russell brands into premium categories
Market Share Trends
RUSSELL
HANES
GILDAN
FRUIT
- T-SHIRTS -
37% 35% 32% 28% 25% 30% 30% 27% 27% 25% 23% 24% 23% 23% 22% 11% 8% 16% 10% 20% 11% 12% 12% 17%
1999 2000 2001 2002 2003 2004
* Market Decisions unit share based on static sample (without Alpha/Broder/NES) for all time periods.
Market Share Trends
RUSSELL
HANES
GILDAN
FRUIT
- BLENDED T-SHIRTS -
50% 41% 39% 34% 32% 37% 32% 31% 29% 28% 29% 24% 15% 20% 22% 25% 27% 24% 1% 7% 10% 12% 12% 14%
1999 2000 2001 2002 2003 2004
* Market Decisions unit share based on static sample (without Alpha/Broder/NES) for all time periods.
Market Share Trends
RUSSELL
HANES
GILDAN
FRUIT
- FLEECE -
29% 28% 27% 35% 38% 39% 39% 40% 27% 21% 25% 19% 22% 18% 10% 21% 14% 13% 20% 17% 11% 4% 5% 8%
1999 2000 2001 2002 2003 2004
* Market Decisions unit share based on static sample (without Alpha/Broder/NES) for all time periods.
Market Share Trends
RUSSELL
HANES
GILDAN
FRUIT
- SPORTSHIRTS -
38% 41% 40% 39% 38% 38% 15% 17% 19% 19% 19% 20% 24% 23% 9% 3% 6% 6% 9% 14% 5% 3% 1% 0%
1999 2000 2001 2002 2003 2004
* Market Decisions unit share based on static sample (without Alpha/Broder/NES) for all time periods.
Russell’s Operations
Startup of low-cost Honduras fabric facility on schedule. Inaugurated on April 1, 2005
Merendon
Merendon
Russell’s Operations
Startup of low-cost Honduras fabric facility on schedule. Inaugurated on April 1, 2005
$60 Million savings last year
Additional $30 million in 2005
Russell’s Operations
Startup of low-cost Honduras fabric facility on schedule. Inaugurated on April 1, 2005
$60 Million savings last year
Additional $30 million in 2005
Sourcing offices in China and Pakistan (Hong Kong, Shenzhen, Lahore)
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CAPITAL STRUCTURE OVERVIEW
Martie Edmunds Zakas Vice President, Treasurer
Capital Structure
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$300MM Asset-Based Loan Facility
$250MM 9¼% Senior Unsecured Notes
£17.5MM UK Credit Facility
Cash Flow
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($ in millions)
2002 2003 2004 3-year Cumulative
Cash from Operations $203 $58 $81 $342
Capital Expenditures (28) (39) (36) (102)
Sale of Assets/Other 10 16 16 41
Dividends (5) (5) (5) (15)
Free Cash Flow $180 $30 $56 $267
Acquisitions/Investments $(5) $(87) $(158) $(250)
Russell—Stronger Today than 2001
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($ in millions)
2001 2004
Debt $356 $398
Net Debt 351 368
Equity 454 563
Net Debt/Total Cap. 43.6% 39.5%
Net debt = total debt less cash
Capital Structure Enhancements
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Paid off $10MM term loan Opportunity to change existing Credit Facility Shelf Registration filed June 2004 Flexibility for additional acquisitions
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Financial Strategies and Results
Bob Koney
Senior Vice President and CFO
New Segment Reporting
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Sporting Goods
Activewear
Other
Estimated Segment Revenues
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2004
2005
46%
4%
50%
50%
4%
46%
Sporting Goods
Activewear
Other
Estimated 2005 Revenue—Sporting Goods RUSSELL CORPORATION
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13%
30%
57%
Apparel
Equipment & Footwear International
Estimated 2005 Revenue—Activewear
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14%
36%
50%
Jerzees Artwear Jerzees Retail International
Long Term Goals and Objectives Beyond 2005 RUSSELL CORPORATION
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Annual Sales Growth 5-7%
Annual EPS Growth 12%
2009 Operating Income (percent of sales) 10%
Year-end Net Debt to Total Capitalization < 40%
Net debt = total debt less cash
Long Term Goals and Objectives Beyond 2005
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Annual Sales Growth: 5-7%
Spalding Group 8-10%
Russell Athletic Group 4-6%
Activewear Group 4-6%
Brooks 15-20%
Accounting/Compliance
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“Head winds” impact (versus two years ago)
E.P.S. Impact
Stock based compensation $0.13
Sarbanes-Oxley/Governance $0.08
Pension expense $0.11
Long Term Goals and Objectives Beyond 2005
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Improve Inventory Turns by 20%
Improve Supply Chain processes
Capital expenditures to approximate depreciation plus amortization
Long Term Goals and Objectives Beyond 2005 RUSSELL CORPORATION
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EPS growth: 12% compounded for 4 years from 2005 as a base
Sales growth of 5-7% annually yields…
Additional Sales of approximately $325MM
Additional Operating Income at Current Margin $26MM
Business Mix $16MM
Honduras facility $10MM
Operational Improvements $6MM
Huffy Sports profitability $4MM
$62MM
Approximate EPS “equivalent” exceeds $1.00 per share
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GAME PLAN
Major Brand Expansions
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Spalding
Today
High-awareness global brand
Strong in equipment, especially basketball
Broadly licensed (apparel, accessories and footwear)
Direction
A global, tightly-managed, sports mega-brand
Major Brand Expansions
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Russell Athletic
Today
Strong position in team, college, and activewear Expanding position in performance products at retail
Direction
A global, major, sports-performance brand with apparel and accessories
Major Brand Expansions
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Jerzees
Today
A leading provider of Activewear in both the Artwear and Mass Retail channels
Direction
Solidify leading positions in Activewear with further expansions into performance athleticwear and embellished products
Major Brand Expansions
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Brooks
Today
A leading provider of technical performance running footwear
Direction
Further global expansion
Expand other running equipment (apparel and accessories)
Russell Recap
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Leading market positions with diversified brands, products and distribution channels Strong customer base to leverage additional product categories Continued expansion into sports equipment and athletic footwear Commitment to maintain diversified low cost supply chains Successful track record of strategic acquisitions Strong sales and profit growth opportunities in all three sports categories
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